Retail Inventories Drop, Wholesale Inventories Rise Less Than Expected

Retail inventories contracted an unexpected 0.1 percent in June, which together with a lower-than-expected build in wholesale inventories for June will be negatives for the inventory component of tomorrow's second-quarter GDP report. However unfavorable for the GDP calculation, low inventories at a time of strong consumer demand and what may be, based on this morning's durable goods report, improving business demand point to the need for inventory building which would be a plus for third quarter employment and production.